Cambodia to Implement Tobacco VAT

Companies importing and distributing cigarettes in Cambodia will have to apply value-added tax to these products effective Aug. 1, reports  The Phnom Penh Post.

The procedure mirrors the application of VAT on other taxed commodities, with a flat rate of 10 percent on all cigarette supplies in Cambodia.

VAT paid at the point of importation or domestic purchase may be claimed as an income tax credit, deductible with output tax, according to the Ministry of Economy and Finance.

Furthermore, enterprises importing cigarettes for export purposes will be permitted to pay a one-off value-added fee at the point of importation.

The Cambodia Movement for Health (CMH) lauded the Ministry of Economy’s guidance as a clear indicator of the government’s commitment to combat the health risks associated with cigarettes and tobacco products.

Nonetheless, CMH Executive Director Mom Kong urged the government to extend the VAT to include non-cigarette tobacco products, as well.  

Citing research by the World Health Organization, Kong stated that imposing an additional tax of KHR500 ($0.125) per pack of cigarettes could increase market prices by 15 percent. This, in turn, could potentially reduce the number of smokers by 30,000 in the next year, and prevent 10,000 premature deaths over the next decade or so.